FCMB secures $300m term loan facility from DFIs, others

First City Monument Bank (FCMB) Limited has successfully secured over $300 million medium and long term funding from Development Finance Institutions (DFIs) and international commercial banks in four different transactions.

This follows an upgrade in the rating of the bank by Global Credit Rating (GCR) to A- (that is, stable outlook).

The $300 million secured by FCMB from the DFIs demonstrates the confidence the lenders and the international financial market have in the management capabilities of the bank. The bank said proceeds of the facility will be used for general lending purpose to key sectors of the Nigerian economy, branch development as well as channel enhancement.

The International Finance Corporation (IFC), a member of the World Bank Group and the largest global development institution; Citibank and Overseas Private Investment Corporation (OPIC), a multilateral finance institution owned by the U.S government, provided the loan.

Other Development Finance Institutions (DFIs) include Nederlandse Financierings-Maatschappij voor Ontwikkelingslanden N.V. (FMO) – the Dutch Development Bank; Société De Promotion Et De Participation Pour La Coopération Economique S.A (PROPARCO), a subsidiary of the Agence Française de Développement (AFD), and the European Investment Bank (EIB), a multilateral finance institution owned by the European Union.

Going by the details of the loans, FCMB secured $100 million senior debt financing from the IFC for a tenor of 5 years, another $100 million from OPIC and Citibank for between 2 and 5 years tenor; $60 million from FMO and PROPARCO for tenor between 3 and 5 years and $32.7 million from the EIB for tenor of 8 years.

Information from the bank indicates the facility from Citibank/OPIC, IFC, FMO/PROPARCO will provide lending to telecommunications, power and infrastructure projects.

In addition, FCMB will utilise a portion of the loan from Citibank/OPIC to finance Small and Medium Scale Enterprises (SMEs) and other activities that will enhance financial inclusion in Nigeria. The $32.7 million provided by EIB will be dedicated to channel expansion purposes.

FCMB had earlier this year, considered raising $300 million from the Eurobond markets, but the plan was suspended due to unfavourable market terms.

It is pertinent to note that the average interest rate on the DFI facilities is about 4% below the Eurobond’s rate.

Ladi Balogun, the group managing director/chief executive of FCMB, said, “The successful fund raising exercise and the number of international institutions that participated in the provision of the facilities is a demonstration of the level of confidence which investors and the international financial market have in FCMB and the Nigerian financial market as a whole”.

He added that “we are excited about this development as it shows that the financial institutions truly believe in the growth potential of FCMB, the excellent corporate governance structures and culture we have put in place”.

Balogun added that a large part of the facility will be used to support critical areas of the Nigerian economy “in line with our commitment to always provide veritable source of funding for the businesses of our customers, while also adding value to our shareholders”.